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  1. avatar says

    In the FRA agreement example the difference is setteled with the bank at the start of the loan and interest would be payble at the end.

    For loans with longer time periods the difference in timing might have a significant effect, would we have to take into account this when calculating the effective interest? Or is it unlikely to be asked of us in the exam?

    • Profile photo of John Moffat says

      @htung00, That is usually the case (settle at the beginning and interest at the end) but it really depends on the agreement with the bank. It is unlikely to be relevant in the exam (it never has been!) but it would be good to mention it if you get the chance.

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